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The Cost of Accepting Credit Cards

Are you worried about the cost of accepting credit cards for your online business? Managing costs for any business owner is key to ensuring that your business remains profitable. Accepting credit card payments for purchases made online from your website is a must if you want your business to succeed. Customers want ease of payment, and businesses must meet their customers’ expectations.

Merchant card service providers’ fees are complicated and you can easily be misled if you do not study the terms, fees and conditions of different merchant card service providers before you make a selection. The fee structure is quite complicated, so don’t allow a sales consultant to steamroll through the ‘fees’ section and quickly move on to the next point. Ask, make notes and then make comparisons.

How are card processing fees calculated?

There is no universal fee structure that applies to all merchant card service providers because they are not the only entities providing services throughout the processing chain of a single credit card payment transaction.

Each credit card payment involves a series of actions and each action is initiated by a different source. Confused? In short, the processing chain includes:

  • Customer or cardholder who initiates the process when making payment
  • Merchant – your online business where the customers wants to pay for purchases
  • Payment gateway – a secure portal where software instantly encrypts the cardholder information into an unreadable code to prevent fraud and transmits it to the payment network
  • Merchant card service provider that supports your credit card payment process by providing software that facilitates card payments via your website
  • Acquiring bank that acts as a ‘messenger’ between the merchant (you) and other financial institutions
  • Banks that issued the credit card to the cardholder
  • Credit card companies, such as American Express, MasterCard, Visa, and so on.

As you can see, it is not a straight forward process and there many role-players in every credit card transaction.

Ask, negotiate and then decide!

From the processing chain it is obvious to conclude that you have to pay for allowing credit card payment to be processed via your online store. The secret is to do your homework well before you appoint a merchant card service provider before you sign-up.

Some of the fees to ask about may include:

  • Per transaction fees
  • Payment gateway fees
  • Payment Card Industry (PCI) fees to ensure security compliance or identify non-compliance; choose a merchant card service provider who values PCI compliance
  • Monthly or annual fees charged by some merchant card service providers to cover costs of installation, maintenance, upgrades, call center, etc.; study fees structures to understand
  • IRS report fees that some merchant card service providers charge to report transaction fees to the IRS

In addition, some merchant card service providers also can charge contract fees, installation fees and early cancellation fees among others. There are merchant card service providers who do not charge these fees, so find them and select well.

For more information about the cost of accepting credit cards for your online business or to sign up for a merchant account, please call (888) 924-2743 or go to


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